Capacity grows on Asia-Europe trade as megaships start deliveries

Date Added: 13 June 2023

Capacity grows on Asia-Europe trade as megaships start deliveries

Davies Turner offers a comprehensive network of international container shipping services, including LCL and FCL import and export operations, and we note that Ocean Network Express (ONE) and OOCL each took delivery this week of a megaship of over 24,000 teu capacity, while Hapag-Lloyd will receive a 23,500 teu vessel next week as capacity continues to build on the Asia-Europe trade, in which we have a strong presence.

The 24,188-teu OOCL Turkiye is the third of a 12-ship order for the carrier, while the 24,136-teu ONE Innovation is the first of six such vessels ordered by the Singapore-based liner. Hapag-Lloyd's 23,500-teu is the first of a 12-ship order.

During a press briefing, Hapag-Lloyd CEO Rolf Habben Jansen said the capacity injection would be largely mitigated by several factors, including a number of holes in its services because it has been short of some ships over the last two or three years.

Habben Jansen also explained that increased ship scrapping and new IMO energy efficiency rules that have entered force will require ships to sail more slowly, which together could absorb “a significant chunk” of capacity that could be as high as 15%.

But the new capacity is coming into play in a heavily oversupplied container shipping market with little certainty in demand. The order book of 7.3 million teu is approaching 30% of the existing fleet capacity, with Drewry forecasting that 2.5 million teu will be delivered in 2023 and another 3.9 million teu next year.
Container ship orders near 30% of in-service fleet

During the press briefing, Habben Jansen predicted “a fairly normal” peak season on the Asia-Europe and trans-Pacific trades in the third quarter, saying that the shipping line expects "normalization in the second half and a recovery from May to August,” a sentiment that is not shared by other participants in the market.

Consultancy, Platts, says that persistently subdued demand and the injection of new-built capacity continues to disrupt the supply and demand balance, resulting in carriers competing on volumes by offering competitive rates.

For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact ocean@daviesturner.co.uk or visit the relevant pages of this website.